The Pimentel Hoax

Ethanol is an excellent automotive fuel. In the pure form, it is 113 octane, outclassing even methanol's 105. It is nearly as safe and non-polluting as methanol, and, uniquely among vehicle fuels, it is not only nontoxic, it is actually edible. The energy content of ethanol is only two-thirds as much as gasoline per gallon, so fuel tanks would need to be 50 percent larger to get the same range on a fill-up. But since, unlike hydrogen (but like methanol), ethanol is a liquid at room temperature, it can be stored in ordinary unpressurized fuel tanks that can be shaped to fit any available space in the vehicle. As a result, accommodating the modest extra fuel volume required is not a problem. Ethanol mixes well with gasoline and has been proven to operate well in millions of existing flex-fuel cars that cost little or nothing more than their gasoline-only counterparts. Ethanol is made from the sugar and starch content of agricultural products, a sector where the United States and its allies are quite strong. By buying ethanol we can redirect funds, which would otherwise go to the Saudis to promote terrorism, to our own farm sector or that of our hemispheric neighbors.

The only downside to ethanol is its cost. Currently, ethanol made from US com costs about $1.50 per gallon to produce. This is the energy equivalent to gasoline at $2.25 per gallon, so when gas retail prices are $3.00 per gallon (about $2.50 per gallon before taxes) or higher, corn-derived ethanol is quite competitive. However, oil prices fluctuate considerably in accord with OPEC's whims and tactics, so it has been frequently the case that gasoline has been cheaper.

In order to cope with this situation and allow a US ethanol fuel industry to take root and grow, the Carter administration in 1980 instituted a program providing a 40-cents-per-gallon subsidy for agricultural ethanol production. Strongly supported by the US farm lobby, this subsidy has remained in place, being raised slightly over the years to its current level of 51 cents per gallon. So long as oil prices remained low during the 1980s and 1990s, this program induced only a modest rate of growth of ethanol fuel production. However, following OPEC's action in jacking up oil prices since 1999—and especially in 2001— subsidized corn ethanol became compellingly profitable and the industry took off. This is shown dramatically in figure 7.1, where the sharp increase in the industry growth rate since 2001 is clear.

It must be said that despite this strong growth, US ethanol production is not yet large enough to make a major impact on energy security. The 4.9 billion gallons produced in 2006, equivalent in energy to about 3.3 billion gallons of gasoline, represented only about 2.5 percent of the total US vehicle consumption of 131 billion gallons of gasoline for the year. Still, it is a start that promises substantially more, especially once flex-fuel vehicles are put on the road in large numbers. Furthermore, and very important, the growing ethanol industry has finally created, in the form of the powerful American

US Ethanol Production

US Ethanol Production

Year

Figure 7.1. Corn ethanoi production in the United States, 1980-2006. Source: Energy Information Administration, http://www.eia.doe.gov.

farm lobby, a political champion for alternative fuels that might just have the strength to go toe-to-toe against the oil cartel.

Not everyone is happy with this development, of course, and the reasons are plain to see. The 4.9 billion gallons of US ethanoi produced in 2006 took $10 billion away from the oil cartel. Thus it is hardly surprising to find the ethanoi program regularly denounced by journalistic hired guns and other business analysts associated with oil industry-funded think tanks, as well as by ideological libertarians whose sensibilities it offends.

One of those who have been especially vocal in this regard is American Enterprise Institute (AEI) resident scholar Dr. Kevin Hassett. According to Hassett, a former Columbia University professor who served as John McCain's chief economic adviser during his 2000 presi dential campaign, the ethanol program is a "scam" that violates all sound principles of free-enterprise economics as laid down by Adam Smith.

Stated thus far, Hassett's arguments are simply standard-issue laissez-faire fundamentalism, although slightly disingenuous since his antiethanol subsidy polemics omit mention of the much larger government subsidies provided to the oil industry (more than $180 billion over the past decade). However, Hassett—who is, incidentally, the coauthor of the 1999 business classic Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market1—takes another step. Not only are ethanol subsidies an illegitimate use of tax dollars, he says, but the program is worthless as a step toward energy independence because it takes more fossil fuel to produce ethanol than the process yields.

Hassett is a capable writer and his polemics sound powerful, but are they correct? (Dow 36,000 wasn't.) Certainly the ethanol subsidy program violates the free market, but does it reduce or increase our dependence upon foreign oil? At the current subsidy rate of $0.51 per gallon, the nation (which now spends about $2.4 billion per year on ethanol subsidies) could replace the entirety of the gasoline we derive from Mideastern oil (20 percent of our total) at a cost of $20 billion per year. That is a very small fraction of the hundreds of billions of defense expenditures the nation is forced to pay defending its access to Arab oil, to say nothing of the additional costs incurred by those terrorist states and organizations funded by the roughly $100 billion in foreign oil purchases the said ethanol subsidy would eliminate. So while libertarians may wince, if the ethanol program actually does reduce foreign oil dependency, then it may well be worthwhile.

Hassett, however, says it does not. In his widely circulated AEI paper on the matter, he provides as a source for this claim "a recent careful study by Cornell University's David Pimentel and the University of California at Berkeley's Tad Patzek."8 Now, former Shell executive Patzek is an oil industry man with, accordingly, no claim to objectivity or credibility on the ethanol issue, but Pimentel is a noted insect ecologist without any vested business interest to defend. Surely a study written primarily by the distinguished Professor Pimentel must be taken as authoritative.

Well, actually, no. The "recent careful" Pimentel-Patzek study was published in 2001,9 and was virtually immediately (in 2002) shown to be grossly erroneous in a review performed by Dr. Bruce Dale, a professor of chemical engineering at Michigan State University.10 Dale's critique was harsh, clear, and forceful. Among the errors Dale identified in Pimentel's study:

• Pimentel's corn yields date from 1992 (and are thus underestimated).

• Pimentel's figures for energy required to produce ethanol and the ethanol yield date from 1979, and his figures for energy to produce fertilizer are 1990 world values per the UN Food and Agricultural Organization (FAO)—not recent US values (and thus grossly overestimated).

• Pimentel assumes all corn is irrigated (only 16 percent is, and virtually no irrigated corn is converted to ethanol). This last point is a source of very large error, since Pimentel assigned huge energy costs for ethanol corn crop irrigation.

• Pimentel fails to assign any energy credit for the high protein animal feed produced as a by-product of ethanol production. (Most of the protein value of the corn crop used for ethanol is preserved, and used as animal feed to produce meat. If the ethanol were not being produced, most of the energy required to grow this feed would have to be expended anyway.)

In conclusion, the Dale study showed that not only was the energy balance for producing ethanol significantly positive—not negative, as Pimentel and Patzek had claimed—but the much more relevant (for energy independence) metric of balance of the amount of liquid fuel produced versus that expended in its production was enormously favorable. In fact, said Dale, at least six gallons of ethanol are produced for every gallon of gasoline or diesel fuel expended in the process. He later revised this to "more than twenty gallons."

Dale's thorough refutation of the Pimentel report is not an obscure document. It was presented in testimony before the US Congress on July 31, 2002, and has been widely cited in professional literature. It thus may be considered odd that neither Hassett nor a host of other "pro-free enterprise" antiethanol journalists ever take notice of it in their articles, which continue to recycle the Pimentel line.

Perhaps one might view the Dale-Pimentel dispute as simply a matter of battling professors, with no way for an outsider to decide the merit of the case. Arguably, this assessment might leave someone like Hassett free to choose his favorite contender, selecting his fellow Ivy Leaguer from Cornell over the critic from plebian Michigan State.

Actually, however, it is easy to see who is right. Ethanol currently sells for about $1.50 per gallon wholesale before the $0.51 per gallon subsidy, leaving the farmer only about $2 per gallon of gross income for every gallon of ethanol sold. Gasoline and diesel fuel both sell for well over $2 per gallon. Thus, even if we ignore all other production costs, it is mathematically impossible for the production of a gallon of ethanol to require more than a gallon of liquid fuel. If we include these other costs— such as land, labor, equipment, repairs, taxes, and so forth—that comprise the large majority of a farmer's budget, it is clear that the fuel required to produce ethanol must be very small compared to the product yield.

Thus it is readily apparent to any numerate person who takes the trouble to consider the problem that the Dale report was substantially correct, and the Pimentel study not only erroneous but ludicrous.

For the benefit of those who can't count for themselves, the final nail in the coffin of Pimentel's credibility was hammered home in a refereed paper published by Alex Farrell and his colleagues at the Berkeley Energy and Resources Group in Science magazine in January 2006.11 Their key result is shown in figure 7.2, taken from the paper, reproduced here. The authors went over the calculations of all the prior literature, including Pimentel and Patzek's, and considered the critical question of how much petroleum is expended by making a given amount of liquid fuel energy in the form of ethanol compared to that used to make the same fuel energy's worth of gasoline. Even using

-8 -6 -4 -2 O 2 4 6 8 10 12 14 16 18 20 22 24 Net Energy (MJ I L)

Figure 7.2. Graphs taken from the important paper by Farrell et al. Fig A (top) shows that using ethanol reduces greenhouse gas (GHG) emissions by about 25 percent. Fig. B (bottom) shows that using ethanol reduces petroleum requirements by a factor of 10. Source: A. Farrell, R. Plevin, B. Turner, A. Jones, M. O'Hare, and D. Kämmen, "Ethanol Can Contribute to Energy and Environmental Goals," Science 311 (2006): 506-508. Reprinted with permission from AAAS.

Pimentel's assumptions, they found that the petroleum cost of ethanol fuel was about one-fifth that of gasoline. Based upon the assumptions of nearly all other analysts, the petroleum cost of ethanol was less than one-tenth of gasoline. In other words, for a given amount of petroleum used, more than ten times as much ethanoi can be produced as gasoline. Therefore, by switching to ethanoi, we can reduce the amount of petroleum needed to make our fuel by as much as 90 percent! Pimentel's claims could not be further from the truth.

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Guide to Alternative Fuels

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